What Do You Want to Know About Fighting Poverty With Cash Payments?

If you happen to be in New York on Mon., Nov. 11, you might want to come see Richard Thaler and Dean Karlan talk about "using evidence and behavioral economics to fight poverty." The event (info here) is run by the Innovations for Poverty Action, of which Karlan is president. I will moderate the Thaler-Karlan discussion -- which means I get to ask them any questions I want about whether and why it is a good idea to fight poverty by giving cash directly to poor people rather than the traditional means of directing aid toward institutions and hoping that it trickles down fruitfully. (There are, of course, more options than just those two.)

In our recent podcast called "Would a Big Bucket of Cash Really Change Your Life?,” we looked at whether a windfall helps a family across the generations. The short answer, at least in the case of the 19th-century land lottery that we discussed: no.

Now Hiring

I have two exciting (at least what I consider exciting) job openings at Innovations for Poverty Action, both helping to design and test applications of behavioral economics to savings. Please help get the word out (note, they require some specialized expertise and experience, ideally someone with consumer banking experience).

Post #1: Manager or Director of our US Household Finance Initiative (USHFI). This initiative uses ideas from behavioral economics to test ideas to improve consumer finance policies and products in the United States. The position will require managing a number of projects, but here’s one example: Both debt and savings are all about small deposits and large withdrawals. But order matters. And habits matter. Banks help us form habits to pay down debt (they’ll hunt us down if we don’t). When someone is paying down expensive (higher than they can reasonably expect to earn on any investment) debt, they shouldn’t simultaneously accumulate savings. But how can we shift someone quickly (ideally automatically) into savings right when the debt is fully paid off? The plan is to have a seamless transition moment, so that the payments continue but now go to savings rather than paying down debt. (More info here).

Happiness Up, Poverty Down

This is a crosspost from Consultative Group to Assist the Poor (CGAP).

There was plenty of encouraging information shared at the recent “Reaching the Poorest 2012” meeting, convened by CGAP and the Ford Foundation. Together with my fellow researchers, I was among the panelists who presented the findings of well over five years worth of randomized control trials evaluating the impact of the Graduation Model. The projects that were evaluated in Bangladesh, Pakistan, Honduras, and India showed an impact on the livelihoods of the poorest that were targeted. The results were mostly heartening – they showed that Graduation Program participants typically improved their food security, stabilized and diversified income, and increased their assets.

The benefits we’re seeing in the lives of the poorest are big and important. The results are strong evidence that the Graduation Model can work. (We’ll know even more in a couple years when we have full results from seven pilots, with more sites and longer term results to see if results sustain themselves.) One of the most intriguing, and I believe important, results is the simplest: happiness went up in the two sites where “happiness” was measured (Honduras and West Bengal).  As part of the surveys to measure the impact of the program on their livelihoods, participants were also asked a series of questions on their general level of happiness and mental health. Often we talk about consumption and income as a measure of wellbeing.

‘Put Your Money Where Your Butt Is’

That’s the clever title of the latest paper from Dean Karlan (one of the founders of StickK.com, who was featured in this New York Times Magazine article yesterday along with my colleague John List) and co-authors Xavier Giné and Jonathan Zinman. The researchers had surveyors approach people on the streets of the Philippines and offer […]

Congratulations to Dean Karlan

Yale economist Dean Karlan recently received a Presidential Early Career Award for Scientists and Engineers — the highest honor given by the federal government to young researchers. I believe the prize comes with half a million dollars of research support to use over the next five years. Dean has been doing important and innovative work, […]